Good morning everybody and welcome to Johnson Matthey's 134th Annual General Meeting. I am Patrick Thomas, I'm Chair of the Board of Johnson Matthey and it's a pleasure to meet with you in person again and to see a number of shareholders who are familiar faces, but also some new faces. I look forward to answering your questions later in the meeting. As the time is now 11:00 A.M. and we have a quorum present, I declare the meeting open. By way of housekeeping, if you do have here in the room a mobile phone, we would ask you to switch it to be in silent mode and avoid any distractions, particularly as it tends to distract the listener to the recording of the meeting or those online. There are going to be no test fire alarms scheduled today. If an alarm sounds, please comply with the spoken instructions.
The building does not have an assembly point, but in the event of an alarm you will be directed by representatives of Herbert Smith Freehills Kramer to an appropriate location. We're also recording the meeting today so that shareholders and other stakeholders who cannot be present can listen on the company's website in due course. If you're joining the meeting via the webcast or telephone conference facilities and you should have any connectivity issue or technical fault during the meeting, a notification will appear on the webcast screen and the operator will advise that the webcast or telephone conference is experiencing difficulties. We will reconnect you as soon as possible. I'd firstly like to introduce to you our board members. To my right is Liam Condon, the Chief Executive Officer. Next to him is Richard Pike, our Chief Financial Officer.
Next to Richard is Doug Webb, one of our Non-Executive Directors and the Chair of the Audit Committee. Next to Doug is Sinead Lynch, one of our Non-Executive Directors. Next to Sinead at the end of the table is the Societal Value Committee. On my left is Simon Price, our General Counsel and Company Secretary. Next to Simon is John O'Higgins, one of our Non-Executive Directors and Chair of the Remuneration Committee. Next to John is Barbara Jeremiah, our Senior Independent Director. Next to Barbara is Xiaozhi Liu , who is one of our Non-Executive Directors. This will be my last Annual General Meeting with Johnson Matthey as I will be stepping down as Chair at the end of the meeting, having served since June 2018.
The appointment of Andrew Cosslett as my successor was announced this morning, and he will join the board as Chair at the conclusion of the AGM. Before proceeding to formal business and based on comments that we had last year, I have asked Liam to give a short update on our business and the strategy as there have been a few moving parts since we last met a year ago. I will then move to the formal proceedings of the meeting, including taking questions from shareholders and voting on the resolutions themselves. Liam, over to you.
Thank you very much, Patrick, and warm welcome also to everybody here from my side and thank you for joining. Also everybody online. As Patrick said, there were quite a few moving parts when we announced our full year results end of May. I'd just like to give you a little bit of context behind that. I think the first point to make is that we achieved our guidance for the year. There were our financial guidance, there were some concerns at half year that we might not reach our targets, but we achieved very solid growth. That got lost a little bit in translation with all the announcements that we made at full year. That was very important because we made commitments from a financial point of view and we delivered on those commitments. I think that's point number one.
Point number two, and that was reported on extensively, was the sale of Catalyst Technologies for GBP 1.8 billion, which is double the value of what the market had attributed to that business. That was created in and of itself, tremendous value. It's something where there was a lot of negotiation for quite some time and resulted in a, we believe, a very good outcome. A big discussion we had at the board was, what about the rest of JM? How strong is JM going forward? Our conclusion was, if we compare it to the strategy we laid out in 2022 and we look at where are we in 2025, we concluded that our core business, which is Clean Air and Platinum Group Metals, is actually in a much stronger position today than three years ago. If we look at Clean Air, our profitability in 2022 was 8.7%.
This year we're targeting mid- teens, 14% - 15%, huge increase in profitability. Plus, due to the slowdown of electrification and an overall slowdown in the energy transition, it's clear that internal combustion engines will be around a lot longer than was originally forecast in 2022.
So t he business is stronger for a lot longer and will generate a lot of cash for a lot longer than was originally assumed. We believe we're in a very strong position, even stronger with Clean Air. On the Platinum Group Metals side, we've always had a fantastic business. We've always been world champions at Platinum Group Metals, really at the heart and soul of JM. We've been very dependent on an old refinery in Royston, which is over 60 years old, prone to breakdowns. We've had to invest significantly to build a new refinery in 2022. That new refinery was four years away. That's a long time. By the time the Catalyst Technologies sale completes, we will be commissioning the new refinery. That opens up huge new opportunities for JM going forward and will allow us also to run the business much more efficiently.
We felt as a company clearly also the PGM is in much stronger shape in 2025-2026 going forward than we were in 2022. On top, we still have significant additional growth optionality baked into JM because we have a hydrogen technologies business where we've already made the investments required. We don't need additional new investments. What we do need is the market to take off. We don't know exactly when the market will take off, but we do know when it does, we participate. JM shareholders will benefit from that. We don't need to make extra investments for everybody to benefit from that. That was the situation. That was basically what we announced at full year. We believe a stronger core business that we're actually very excited about for the future. Great value creation through the sale of CT.
Overall, we believe a very sustainable future for JM, which actually allowed us to make also very sizable returns commitments for our shareholders from 2026-2027 onwards. That, just in very short brief form, is a summary of what we outlined at our full year results. It would be remiss of me not to use the opportunity to say a personal thanks to our Chairman, who after seven years is now stepping down. I'd like to say personally, also on behalf of the executive team, on behalf of the board, and also as a shareholder: Patrick, thank you for all your counsel, your guidance over the years. You've helped us through some really tough times, and I'm actually really pleased now with the outcome that we've come to, that as you move on, the legacy that you leave behind is stronger than ever for JM. Big thanks to you.
With that, I'll hand back to you.
Thank you very much, Liam. Thank you, and I'll now, if you allow me, turn to the formal proceedings of the AGM. The notice of the AGM, together with the explanatory notes, was published and posted to shareholders on the 12th of June this year. Accordingly, the requisite notice of the meeting has been given. I propose that, with your consent, the notice of the meeting should be taken as read. Is that agreed? Yes. Thank you. The notice of the meeting has been taken as read. Before proceeding further, there is one point on the notice of the meeting for me to mention: the number of ordinary shares stated in Resolution 19. The buyback resolution should actually be 25,159,034 shares, as stated in the notes of that resolution in the notice. This is the correct figure that corresponds to 14.99% of the company's issued share capital.
This typographical error was a carryover from last year's statement. I therefore propose that the share number in Resolution 19 be corrected accordingly. Do you agree to that correction? Thank you. I should now like to proceed with dealing with all questions from shareholders on any matter relevant to the business of the meeting at the outset before we move on to voting on the resolutions. Before asking any questions, please give your name and state whether you are a shareholder, a proxy, or corporate representative. If you are a proxy or corporate representative, please state your name and the name of the shareholder that you are representing. If you are present in the room, please raise your hand and wait for a microphone before speaking. Otherwise, your question will be lost from the recording.
If you're joining by telephone conference call, press Star 1 and 1 on your keypad to ask a question. If you are joining via webcast, please ask questions by typing into the Q&A box provided. We will first take questions from this room, and I will then move to the telephone conference and finally the webcast. The meeting is open to your questions. Please raise your hand if you would like a microphone, which will arrive immediately.
Good morning. My name is Richard Wakeling and I'm a private shareholder. My question is, in your first announcement about the sale of Catalyst Technologies, you said that JM would pay GBP 8 per share to all the JM shareholders. I would like to make the point that I would hope that not all of that is going to be in the form of special dividends, because that would create very large income tax liabilities for some private individual shareholders. I hope you can find other ways of distributing the money, maybe by share buybacks or by return of capital, perhaps?
Thank you for the question. Maybe I'll take the answer to that, or perhaps Richard.
Sure.
We've looked at all the options here, and inevitably we looked at share buybacks first because that generally would be the preference of lots of shareholders. Unfortunately, because of the liquidity in our stock, we can't do it all as a share buyback for sort of GBP 1.4 billion. It would take us about six years to do that as a share buyback. We can't get the money back into shareholders' hands over a sensible time frame. There will be a large special dividend and consolidation as well as a share buyback. It's likely to be something in the order of 80% special dividend, 20% share buyback.
In the old days, it was quite common for companies to do repayment of capital in a situation like that where you sell a very large division. I haven't seen it lately. Can perhaps our lawyer comment on that?
Comment or Richard,
I mean, it isn't as usual.
Today we have a look for the different options, and together with advisors we've concluded that special dividend and the share buyback will be the form which we make returns.
Maybe if I could just add one final comment. We have talked to many, many shareholders all over the world, and each has expressed preferences, and those preferences do not follow one continuous track or line of preference. It is very difficult, therefore, to do, as you say, the share buyback in a reasonable period of time, as most shareholders' preference would be to see money coming back to them sooner rather than later. That is the reason for our simple allocation. There are all sorts of exotic and complex ways of trying to do this type of return, and most large shareholders do not like those methods. I can offer you as an opinion, I suspect there are completely different views even within this room with a small number of shareholders, because that's my experience. The preference is entirely different due to personal circumstances.
I'm sure you understand that, and I understand your position.
Some of the directors might have a problem.
Some of the directors may have a problem. That's not our consideration. Thank you for raising the point because I know it's a top of the mind issue for many of our shareholders. Having experienced these types of distributions before, I know what the restraints are and we're following customer practice of what is possible and overall what is preferred. Individuals may find it uncomfortable or may find it extremely beneficial. It's very, very difficult to tell. Are there any other questions here? Yes, the lady, if she just waits for the microphone.
Rosita Sherrod, shareholder through Hargreaves Lans down. When you sold CT , you obviously got a very, very good price for it. I can't remember who bought it, but they obviously feel they can make a lot of money out of it. Why didn't you, and have you in fact just sold the family silver?
Yeah, perhaps you answered the question.
Yes. Thank you. It's a very good question. We sold it to Honeywell, and again, the value that we sold it for was twice as much as what the average of consensus was, what the business is actually worth. There were other interested parties. Nobody came close to the valuation that Honeywell was willing to pay. The reason Honeywell can afford to pay this valuation is because they have much bigger commercial synergy opportunities. They have a much bigger, for example, representation in the U.S., much bigger customer footprint in the U.S. than JM in the Middle East and in other parts of the world. Our portfolio in their hands, they can cross-sell more product, so they can make more of it than we could, quite honestly, just because of the size of their commercial footprint. That's the area where they can make more of the business than we could.
We had a very high valuation on this business. In essence, they're paying the full value upfront in cash, and they're taking all the execution risks. We think it's a really good deal for JM shareholders.
Yes. It's rather like Honeywell had one half of a jigsaw puzzle and we had the other half. In terms of technology, putting the two together allows an optimization which would be impossible on our own. Gentleman in the second row.
James Williams, private shareholder. James Williams, private shareholder. Can I ask about this, the hydrogen development? I thought that a lot of the car firms will look at regeneration and the technology for storage of regeneration of the engine. Do you see hydrogen still as one of the main next steps going forward in the automotive industry?
Yes.
Thank you. For hydrogen we see two main applications. One is fuel cells for heavy duty trucks. We don't believe that there will be any significant market in the light duty space. We just recently announced from Stellantis that they're pulling back for vans that would be more in the light duty category. The issue is for heavy duty you would need so much battery space that you wouldn't have enough space for the payload. Fuel cells make a lot more sense for heavy duty trucks. That's where we think big application will be. The other application is electrolyzers to actually produce green hydrogen. We produce the core component for both fuel cells and electrolyzers, the catalyst-coated membrane. That's where we're focusing. Heavy duty trucks in automotive, great potential, less so in light duty.
Yes. Do you see the difference in the car industry to the commercial vehicle industry?
Yes. Yes.
Yeah, yeah.
Okay. Thank you for your question. Any other questions? Gentleman in the back row.
My name is John Mayers, I have an account through Halifax.
Can you give us some idea about tariffs and where you're vulnerable? Can you give us some idea about your tariffs vulnerability? I couldn't find anything in the accounts as to where you are in the world where you're producing.
Could you clarify that a bit?
Yeah. Yes, sure. Thank you. I think it's a very relevant topical question right now. It's also a very fluid question and answer right now. The good news is JM, we basically, being a multinational company, we produce in all key geographies. In Europe, in Asia, China, and in the U.S. at a minimum. If you take the example of the U.S., we produce in the U.S. for the U.S., same in China for China. We have a kind of a natural hedge there against tariffs. Of course, some components and parts will cross borders and can be subject to tariffs. For us, what's crucial is Platinum Group Metals today, which form the backbone of most of our products. They're exempt from tariffs. They're exempt from tariffs because governments around the world have understood the criticality of Platinum Group Metals and that it would be self-defeating to put tariffs on them.
Having an exemption for PGMs is very helpful. That means there is no material impact on JM from the current tariff situation. What we don't know is the indirect impacts of a tariff war. For example, if tariffs lead to significant price increases for autos and demand declines, inevitably that would impact us as well. That would be an example of an indirect impact. Right now we don't see that, but that's a risk that we are monitoring closely.
Thank you.
Thank you very much for your question. Any other questions in the room? I will just pause a little. Okay. If there are no other questions in the room, then I will move to the other channels. Firstly the telephone conference line and then the webcast.
Hello. There are no phone questions at this time.
Okay, on the webcast.
One question on the webcast from Mirko Sidoni. Are there any updates about the Catalyst Technologies sale and payouts to shareholders in terms of procedures and timescales?
Okay, partly covered, but worth summarizing.
The sale of CT is dependent on regulatory clearances, again through the competition authorities in various areas of the world. We have to get clearances in about 12 jurisdictions. The key ones are the U.K., the U.S., China, and Europe. The U.K. has already come through, so things are moving in the right direction. It will still be several months before we get clearances from the other jurisdictions. That time scale is uncertain yet because it's very much dependent on the timescales of the regulatory bodies. When we do complete, as I mentioned earlier in the call, we will clarify the money's coming back. It will be GBP 1.4 billion in total. It's likely to be in the order of about 80% special dividend, accompanied by share consolidation and then a share buyback, which will probably play out during the calendar year 2026.
Okay, thank you very much, Richard. Any other questions? Okay, thank you for your questions. I'd now like to move to voting on the resolutions. I'm exercising the authority contained in the company's Articles of Association to now call for a poll to be taken on all resolutions that are put to the meeting. This is in line with best practice and gives our shareholders all the opportunity to have their votes recorded, even if they're unable to attend the meeting in person. As a reminder, those who are joining via the webcast or telephone conference will not be able to vote during today's meeting and were given the opportunity to cast their votes in advance. I am appointing Equiniti, the company's registrars, to act as scrutineers. When you registered at the meeting today, each shareholder, proxy, and corporate representative will have been issued with a poll card.
If there is anyone who thinks they should have a poll card but does not, please raise your hand now and somebody will come and assist you. Everybody is fully equipped. Good. If you are a shareholder, please complete the poll card by inserting in block capitals your full name and address. If you are a proxy or a corporate representative, please insert in block capitals your name and the full name and address of the shareholder you are representing. Please indicate the way in which you wish to cast your vote in respect of each resolution by putting a cross in one of the boxes: for, against, or withheld. Please note that a vote withheld is not a vote in law and will not be counted.
If you wish to vote only for some of the shares on a particular resolution or you wish to split how you cast your vote, you should enter the number of votes being cast in the for, against, or withheld column instead of a cross. Please ensure that you sign the poll card and hand it to a representative of Equiniti as you leave the room. If you have already voted by proxy, then you do not need to complete the poll card unless you wish to change your vote, in which case you can complete the poll card and your new voting instructions will be recorded. We will now proceed to vote on the resolutions, which I will formally propose to the meeting.
The full text of each of the resolutions is set out in the notice of the meeting, a copy of which you will have received, save that the number of shares set out in Resolution 19 has been corrected as approved earlier in the meeting. Resolutions 1 - 16 are ordinary resolutions which require a simple majority to be passed. Resolutions 17 - 20 are special resolutions which must be passed by a majority of not less than 75% of the shareholders present and voting either in person or by proxy. I now formally propose all resolutions to the meeting and declare the poll formally open. The poll will close 10 minutes after the end of the meeting. If you have any questions about filling in the poll card or if you require assistance, please speak to the Registrar's representative.
The scrutineers will calculate the results at the close of the poll. These will be announced later in a stock exchange announcement and will also be published on the company's website. The proxy voting results achieved and received in advance of the meeting will also be shown on the screen. That concludes the formal business and brings the 134th Annual General Meeting of Johnson Matthey to a close. The poll will close in 10 minutes and I remind you to pass your completed poll card to the representative of Equiniti when leaving the room. Thank you for taking the time to join us today, either in person or via webcast or telephone conference call, and thank you for your very relevant questions. I bring the meeting to a close. Thank you.